Solid State Circuits v. EPA

The court rules that the punitive damage provision of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) does not violate the due process rights of recipients of Environmental Protection Agency (EPA) administrative cleanup orders. In footnotes, the court initially notes its agreement with the district court's holdings that it lacked jurisdiction to review the merits of an EPA cleanup order prior to an attempt by EPA to enforce it, that EPA's commencement of the cleanup rendered moot the order-recipients' request for an injunction prohibiting EPA from enforcing the order and collecting daily penalties, and that the challenge to the constitutionality of the punitive damage provision is ripe for review. The court then rules that CERCLA's statutory scheme, under which EPA may bring suit for treble damages under § 107(c)(3) against parties who failed without sufficient cause to comply with an EPA cleanup order, does not violate due process. The court holds that the sufficient cause defense in § 107(c)(3) may be constitutionally interpreted to preclude the imposition of treble damages if the order recipient had an objectively reasonable basis for believing that the order was either invalid or inapplicable. In a footnote, the court observes that the courts or EPA remains free to adopt a subjective good faith standard, but notes that the Superfund Amendments and Reauthorization Act of 1986 appears to require the courts to refuse to award the EPA punitive damages if to do so would be patently unjust. The court holds that to satisfy the objective standard, an order recipient must show that the provisions of CERCLA, EPA regulations and policy statements, and any formal or informal hearings or guidance provided by EPA create an objectively reasonable belief in the invalidity or inapplicability of the order. However, if neither CERCLA nor applicable EPA regulations or policy statements give the challenging party meaningful guidance, the court holds that the burden shifts to EPA to show that the challenging party lacked an objectively reasonable belief in the validity or applicability of the order.